School Funding

The final day of Parliament before the summer recess saw the Government's response to the Review of Education Capital in England and the launch of consultations on school capital funding, revenue funding and academy funding. These announcements included details of extra funding for new school places and a new private finance initiative (PFI) school building scheme.

Private Finance Initiative

A new PFI has been introduced, which is estimated to be worth £2bn in construction costs. These funds are expected to cover the equivalent of building approximately 100 secondary schools. The programme is likely to cover a mix of primary, secondary, special schools and sixth form colleges, so may provide for up to 300 schools in total. The first schools in this scheme are expected to open in 2014-15 with 20 per cent of the schools built in that year and a further 20 per cent in each of the following four years. Applications open on 25th July 2011 and close on 14th October 2011.

This programme will be open to local authorities and schools that had been due funding via Building Schools for the Future but, critically, it will also be open to those, who despite real problems, had never been promised BSF funding.
Michael Gove

Given that the Department for Education's capital expenditure limits fall from £7.6bn in 2010-11 to £3.4bn in 2014-15, it is perhaps unsurprising that a PFI approach to new school buildings has been chosen, as current accounting rules means that it will be off the Department's balance sheet. However, in April 2011 the Government's own spending watchdog, the National Audit Office, concluded:

"The case for using private finance in public procurement needs to be challenged more, given the spending watchdog's previous analysis that the cost of debt finance has increased since the credit crisis by 20 per cent to 33 per cent. Also, under the national accounting rules, privately financed projects will often still be off balance-sheet which may continue to act as an incentive to use PFI. The NAO concludes that, in the current climate, the use of private finance may not be as suitable for as many projects as it has been in the past."

Basic Need

An additional £500m will be provided to help local authorities to cope with the pressures that increased birth rates are placing on school places. This Basic Need funding is on top of the £800m that was announced in December 2010 and will be provided to local authorities in this financial year (2011-12).

An update to the national pupil projections is expected next week, but previous predictions suggested that approximately 400,000 more pupils will be in primary schools in 2015 compared to 2010.

Building Schools for the Future

In February 2011 the High Court ruled that Michael Gove's decision to axe Building Schools for the Future (BSF) programmes in six local authority regions was unlawful and he was ordered to reconsider his decision. Speaking before his announcement about the new PFI scheme, Michael Gove stated that he was "not minded to restore their specific BSF projects" but that the local authorities could make a final representation to him before he makes his final decision. He also confirmed that the Government would "indemnify them for contractual liabilities resulting from the stage their projects had reached".

Capital Review

In discussing the capital review, led by Sebastian James, Michael Gove stated that he was grateful for the "exceptionally thorough work" and that he wished to accept the majority of the recommendations that were made in the review, but that this would be based on the outcomes of a further three-month consultation. This new consultation will mean a further delay before any new school building programmes can commence.

The Government agreed that funding needs to be targeted based on Basic Need and school condition data. In accepting that there should be a new survey of school building condition it was acknowledged that it would be a significant and expensive undertaking, and that it should take into account information that already exists.

Whilst it was agreed that some funding should be retained centrally for demand-led programmes, such as Free Schools, the Government wishes to consult further on the recommendation that the bulk of capital funding should be allocated as a single budget to local authority areas. It was also stated that any aggregation of school devolved capital funding to local authorities or academy sponsors should be on a voluntary basis.

The Government said that they wanted to move to a national procurement model managed by a central agency, but they did not intend to "over-ride existing local or regional arrangements where they are shown to be as efficient and effective at building or improving schools to a high standard".

On the recommendation that schools be built to a standard design and specification, the Government stated that they intended to procure the plans, but they will consult fully on these designs as they are developed.

Funding Consultation

In April 2011 the Government published their consultation on a fairer funding system for schools. The second stage of this consultation was released on 19th July 2011 and asks for views on a further 47 questions. The document confirms that the current funding system will stay in place for 2012-13 and consults on whether changes to the funding system should be introduced in 2013-14 or delayed to a later period. A seperate consultation for local authorities to consider academy funding has also been launched.

So, although July brought many announcements about funding schools in England, it has left a great number of questions yet to be answered. With all the consultations that were launched you have plenty of opportunity to provide your answers to these questions.

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